Cash-Secured Put Strategy
Neutral to BullishBeginnerIncome Strategy
Generate income by selling put options while holding cash to potentially buy stock at a discount.
Cash Secured Put Calculator
Cash Required
$14500.00
Max Profit
$350.00
Max Loss
$14150.00
Breakeven
$141.50
Premium Yield
2.41%
Annualized Return
29.37%
Profit/Loss at Expiration
Position Summary
• Short 1 put at $145 strike
• Premium received: $3.50
• Cash secured: $14500.00
• If assigned, purchase 100 shares at $145
Strategy Overview
Type:Cash + Options
Outlook:Neutral to Bullish
Risk/Reward:Limited Reward, High Risk
Complexity:Beginner
Description
A Cash-Secured Put involves selling a put option while holding enough cash to purchase 100 shares if assigned. You collect premium upfront and may acquire stock at a discount.
Setup
Hold Cash (Strike × 100 shares)
Strikes: Strike price value in cash
Expiration: N/A
Sell Put Option
Strikes: Slightly out-of-the-money
Expiration: 30-45 days typically
When to Use
- •You want to potentially buy stock at a lower price
- •You are bullish to neutral on the stock
- •You have cash available for stock purchase
- •You want to generate income while waiting to buy
Advantages
- +Generate income from premium received
- +May acquire stock at discount to current price
- +Flexible - can close early if profitable
- +Cash earns interest while waiting
Disadvantages
- -Opportunity cost of holding cash
- -May be assigned stock in declining market
- -Limited profit potential (premium only)
- -Requires significant cash reserves
How It Works
1
Reserve Cash: Set aside cash equal to strike price × 100 shares.
2
Sell Put Option: Sell a put option below current price, collect premium.
3
Two Outcomes: Keep premium if expires worthless, or buy stock at strike if assigned.
Key Metrics
Max Profit:Premium Received
Max Loss:Strike Price - Premium (if stock goes to $0)
Breakeven:Strike Price - Premium
Best Case:Stock above strike at expiration
Assignment Risk:If stock below strike at expiration